twice that of exxon mobil. that watch better go well. it's tuesday february 24th 2015. squawk box begins right now. live from new york where business never sleeps, this is squawk box. good morning everybody. welcome to squawk box here on cnbc. i'm becky quick with joe kernen and andrew ross sorkin. it's another fridged morning in the big apple. if you're in bed. stay there. trust me. manhattan with temperatures around 2 degrees. add in the wind chill and it feels about negative six but not just new york is feeling this. the latest winter storm is expected to spread snow and ice from the rockies to parts of the south today. there could be snow on the beach in part of the southeast. keith carson will be joining us with today's national forecast in just a bit. but first the big stories we're

watching this morning. crude oil prices falling. this is all coming as traders question reports that opec might meet for the meeting in june. some people questioning those sources but it's been something the oil market has been watching closely. in other global news positive developments on the on going greek saga. athens sending economic reform plans to the euro zone overnight. the proposals include measures to crack down on tax evasion and corruption. and back here a packed agenda of economic and corporate news. we'll be getting the the home price index. february consumer confidence and the richmond fed survey. home depot and comcast and macy's. >> we have earnings that are just out from dow component home depot you saw across the screen while becky was talking. earning $1 per share. beating estimates of 89 cents.

home depot also announced 26% increase in it's quarterly dividend. now up to 59 cents per share as well as an $18 billion share repurchase program. the company did say the strong u.s. dollar would shave 6 krenlts per share off a full year profit. comparable same store sales growth should be up a little over a percent in the premarket right now. here's other stocks to match this morning. profits jumping better than expected 78%. the company selling more homes at higher prices and then topping expectations despite a 31% drop in first half earning prices for all of the main products. they fell sharply. the company said it will continue to kuscut costs and then disclosing a 5.9% stake in computer sciences. they plan to continue talks with the it services company about

strategic alternatives. we'll see if there's a shake up there and first solar and sunpower are in advanced talks to form a joint venture to sold some of their solar power assets. the company is planning to file for an ipo in the so-called yield yield. >> the justice department and cftc are reportedly investigating ten major banks for possible rigging of precious metals markets. the doj prosecutors are taking a close look at the price setting process for gold silver platinum in london. the cftc is said to have opened a civil investigation in these matters. jp morgan is meeting with investigators today. they're to start changing big client deposit fees. the main reason behind the new move are new rules that make holding money for clients too

costly. retail customers won't be impacted and we'll talk more about banking in the next half hour with analysts -- >> that's a complicated one. >> i'm focused on apple. >> how does the bank call you the customer your the corporate client and say we're going to trade you a lot of money to keep it here. >> if every bank is doing that you're not going to get a cheaper rate somewhere else. >> only if every bank is doing it and then if every bank is doing it talking about antitrust issues and other things. >> it's a reaction to regulatory. >> but are they all going to do it? isn't there going to be one bank that says i prefer to take your deposit and maybe have some problems with that and lose money on it and have other issues but i can create business from it in another way. >> banks have been doing it for too long. apple is now at 775. 775 billion. >> for market cap of. >> 775 billion is the market

cap. so to get to a trillion, i think are there about 5 billion shares outstanding. >> 25% increase. >> so it has to go from 133 to 160 or 170 and it will be a trillion dollar company. the old expression is that no tree grows to the sky but this has been a tree -- >> someone has to do it. >> sooner or later we'll have a trillion dollar company. is this the one? >> might be. >> is apple worth twice what exxon is worth? we used to do these comparisons to get to the size of aol. we know where they are now. >> how many years ago was that? >> you will have a trade. i didn't think it would be a gadget maker. how big is apple pay going to be? how much money are they going to make? are they going to buy a car company? is the watch going to be any

good? how many more small, medium sized and gold covered ipads can they sell? how many people own iphones in the world now? what's the penetration? what is the penetration of apple sorkin? is it overvalued yet? would you sell half your position? >> i don't have a position. >> downward facing dog position. >> i'm not sure. it's oddly an undervalued company based on what it currently does. >> 41.4%. >> on a relative basis to other companies it's actually an undervalued company. that's the crazy part. >> but they have been saying that since $300 billion. >> it's still been the case. >> 41.4% of the smartphone market share in the united states. go around the world it's smaller and growing. >> still not in the dow but it's

like the entire s&p 500. >> wouldn't you be worry first degree they did put it in the dow suddenly. >> that will be it. then i'm thinking about me millennials again. we have our senior personal finance correspondent coming in here. sharon epperson who normally if it's not the "today" show she's not interested. she is usually on the "today" show but now i think if these millennials are going to sit in their stupid 0% savings accounts, all of the baby boomers aren't going to need to support them because the baby boomers at least still have some stocks. they'll be kids living at home. >> maybe we'll have more of them watching if you stop calling them stupid. >> yeah. >> they need to buy apple. >> because of 2008 they're still shell shocked.

>> they are saving more money though. >> but you have to try -- you can't save money at 0%. if you put money at 0% for 10 years. do you know what you get at the end of 10 years? yeah, i don't think it goes up. what's 72 divided by 0. >> it takes a long time. all right we'll talk more about the me linealsillennials. we'll talk about impressive savings rates. let's take a look at the markets. mixed day for the markets. you saw the dow and s&p close lower. nasdaq added another five points to end at a 15 year high and janet yellen is going to be moving markets one direction or the other. that's what we're anticipating ahead of that. if you want to check out what's been happening in europe this morning you'll see that right now in the early trade things have barely budged there as well. unless you look at greece in which case the market is up by more than 7% on the idea that

maybe they're going to reach some resolution with whatever that partnership is now being referred to. if you take a look at what happened overnight in asia you'll see that the nikkei closed up by about three quarters of a percent. the hang seng was down by about .3%. oil prices have been very interesting. yesterday jumped for prices for a very brief amount of time as there were reports about a potential emergency opec meeting. reports were questioned. crude oil ended upseteling down by about 3% back below $50 this morning. it's still there. to 49.27 for wti. check out the ten year note. it's yielding 2.084%. and you'll see the dollar is up across the board. dollar yen is at 119 history to hit 52. gold prices were back at 1200

dollars again. you can see this morning they're down another $3.10. >> i think it's a catch 22. >> what is? >> with millennials. by the time they realize they need to be watching us and investing they're out of the demo. now they're watching like look at that guy and they're watching like robot chicken and family guy. they're watching all of this useless -- >> spongebob. all of this useless stuff. they're going to live forever. they're smoking cigarettes and immortal and they don't have to save any money. >> we've all been through these years. >> but we don't get serious and start investing. >> until it's too late. >> so maybe we just need to face the facts, right? >> i'm fine with the facts. >> well you're a millennial though. >> i'm not. >> i'm so not a millennial. >> what are you? generation xxx.

>> i'm x or y? single x. >> okay. markets in a bit of a holded pattern ahead of janet yellen's testimony today. here now with us is darryl cronk. president of the wells fargo investment institute. >> really. >> really. there's such a thing? >> there is. >> is it nonprofit. >> no. >> it certainly sounds nonprofit. it sounds high and mighty. also chief investment officer of wells fargo's retirement division. currently $1.6 trillion. wow, mark. you have some work to do. he is chief investment strategist. you have $70 billion. >> roughly speaking. >> both of you guys have a lot of responsibility. i don't envy you. how's the market setting up for you. >> bullish. we're bullish equities, bullish the dollar. bullish volatility.

>> bullish volatility. so 10 to 20% down or not? >> that's probably a little aggressive. unless the fundamentals rollover which we don't see. as a matter of fact as we talked about a lot the consumers as good of shape as it's been in 8 years. you have rising consumer sentiment and we'll get some confidence numbers later today. housing prices will be out today and the world is good for them at this point. it's not leslie gonecessarily goldilocks. >> if you're not worried about greece. i don't know if i should be worried about greece. it's so far away and small. a couple of islands. if you're not worried about that, look at home depot. consumers strong inflation is low, oil is $50. what's not to like. >> i do think it's a fwrksgoldilocks

environment. we're 5.5 years deep into this expansion. growth in the first quarter. so we'll go toward six. the possibilities of a recession are remote and if investors are worried about greece they would have showed up in euro stocks. it's up 11% year to date. it's an environment that risk assets continue to be favored. certainly over cash. >> they're getting mad at me again. >> and at the end of the day while i don't think u.s. equities are going to provide the returns that nonu.s. equities are going to provide and i have seen that to be true year to date it will be an environment in which investors will not want to be idoled in cash where the opportunity cost is exceedingly high. >> i'm a millennial and i'm not watching it this morning? are you sure? you might be watching a different one. one of you guys likes financials.

is that you? >> there's a lot of pressure on net interest margins but ultimately whether it happens in june or september we're bog to see a bump in interest rates and as a consequence of improving domestic conditions commercial and industrial loan production is growing rapidly. we're starting to see loosening of credit markets for residential loan activity and continuing to recover the housing market that's a 1-2 punch that should be favorable for financial which is are priced among other things in the marketplace relatively cheap and relative being the operative word there andrew. >> institutions becky. institutions. >> i couldn't remember the new word. have you written greece off and figured don't worry about it? things will be resolved? >> the markets have. spreads are not, to mark's point, the french cac, the

german dax, everything is setting record highs at this point. they'll get a deal done. we're pretty confident. >> who sees froth? you don't see any? 5,000 -- it was frothing the first time but the earnings tripled basically and it's at the same level. >> when you look at the markets we see fair valuations. i got done writing a report yesterday about this. the market spends very little time in fair valuations. it's either cheap to expensive or expensive to cheap. we're probably still moving from cheap to maybe expensive at some point but we're not there yet. >> froth anywhere? >> we're long apple. that's where i would be more worried. bio tech. selling at six times sales. >> $100 billion company. >> exactly. many of which are barely profitable. so there's pockets of frothe within the marketplace but in the aggregate we think

valuations are full. and therefore we see the upside. >> thank you. you missed a button. >> where. >> right there. >> oh thanks. it was hidden by the tie. why are you outing my button on the show. >> it's not like your barn door is open and you're letting a bunch of air in there. that's good. >> just your button. >> i'll wait next time. >> you didn't give a shout out to brennan clark. >> he said he -- no that was the guy i said. i didn't say his name. okay. >> give him credit. >> we should and we're going to continue to do that. >> but did you see there's another guy that says this millennial is up watching the show. i suggest you use alternative ways to describe our generation instead of smokers. >> but i already answered that tweet with a tweet and i said i'm just stirring things up. i'll try anything. >> right. >> get reaction. >> to get a reaction. >> you know a lot of them in the bar they're all like -- >> now they're vaping.

>> exactly. >> which is even more bizarre. >> it's bizarre but it's not the same as cigarette smoke. >> i guess not. i guess not. but you know what i mean. they're all going to live forever. they don't need to invest. they can blow all of their money on their apps. we're having tumblr on. what is that? >> huge business. it's going to be a good interview. >> thank you for joining us today. when we come back the street reacts to home depot's better than expected results. the retailer prepping for its critical spring selling season but at least one thing has home depot worried. that's the dollar. right now as we head to a break, take a look at this date back in history. ♪

some scary moments in dallas last night. an american airlines plane taxiing slid off the taxi way and got stuck in the grass. they snapped the pictures of the plane. the faa says the front nose gear slipped off as it turned the corner and became stuck in the grass. no injuries have been reported. no cause for the accident just yet but up to an inch of sleet fell overnight. monday covering much of the area in ice.

>> do you watch nightly last night? >> i did. >> did you see it down in dallas? midday. downtown, midday. not a car. they have never seen this before. but you know why this is happening. thank god they changed it right? think if it was still warming. thank god they thought that. anyway, now to today's national forecast keith carson -- what you're joining us from cincinnati where it was like how many below? it was like going to be like 10 below or something and we're not talking wind right? >> yeah yeah the actual temperature is 7 below, good morning and the record by the way was 1 below. usually when you break low temperature records you do by a degree or two at the most. it's a sign of the cold air we talked about yesterday.

if they have snow here about five independence from lands on the ground officially. places like boston are struggling over and over with the snow and where to put it. they played a role and how cold it got during the overnight hours. whether or not it's present is a factor. allows it to get colder overnight. the other factor is it is totally clear here in cincinnati. that's something we called radiational cooling. normally the clouds will insulate and heat you up in the daytime but it escapes into the atmosphere and allows your coolest temperatures. the saving grace today is that it is calm. you talk about wind chills and that's the stat we give people as far as how cold it is. the wind chill the same as the temperature. wind chill only about 1 or 2 miles per hour. by the way, the coldest cincinnati has ever been 25

degrees below zero. a lot of their top ten records actually have them in a row there in 1977. if people have lived here long enough this isn't all that bad. i didn't get to wear my suit but i did find a way to wear a fashion statement for you and i want to disappoint you. >> underneath that there's a great shirt-tie combo. are you in fountain square? i can't tell where you are? are you in fountain square in cincinnati. >> yeah, this is fountain square right here. >> good there is a skyline not opiate i don't think. >> skyline. >> yeah as long as you're there or you get some ribs or something, you're very lucky to be assigned there. you might not think so but you're very lucky to be assigned to the queen city. >> you know what i actually had never been here admittedly and i was telling the camera crews and guys i went to a great

restaurant last night. >> where did you go? over the rhine or over to kentucky. >> oh gosh orchards it's some sort of -- it was fancier than i wanted it to be. >> why was it fancier -- >> i'm here by myself. >> you're in cincinnati and you found a fancy restaurant. how could that be? new york centric attitudes. >> he says it's fancier than i usually go by myself. he wouldn't go by himself. >> he's on an expense account he can do it. >> do you know how old the cincinnati ballet is while you're trashing cincinnati. >> he is not trashing cincinnati. he was saying nice things. >> do you know how easy it is to go to a red's game. >> we're making him stand outside in minus 7. >> it's not cold out here guys don't worry about it. >> is it normally overflowing

with water. >> it does in the summer. it's the center of cincinnati. >> let us continue our conversation but maybe we should let him go inside. >> go inside and get warm. >> the png dolly parton building is if you look east -- >> why do they call it that -- >> it's has two big -- they really do call it that. i'm serious. they do. anyway thanks keith. see you later. >> get warm. >> in the meantime we'll talk -- how do you go from there to there we'll talk about home depot, on the bottom and the top lines. number one home improvement chain reported a 36% jump in quarterly profit giving us reaction right now. brian is on the phone. he's the senior retail analyst. good morning. >> >> walk us through the headline to you. there's a couple of things going

on here. there's dividend and stock repurchase program. >> this is a very good report from home depot. the numbers people will be focused on is what you mentioned, very easily beats an 89 cent estimate and you had in the united states almost a 9% top which tops most of the forecast i heard out there. a very solid fourth quarter report from home depot. if you look at the initial guidance for 2015 it may be a little bit light but that's typical home depot style. they're usually conservative here. >> and then was the dividend to surprise you? was the stock repurchase program a surprise to you? >> it's nice to see those. both of those factors in this report but it's been very consistent with home depot's capital allocation plan for awhile. this is a company that's been aggressive for several years returning excess capital to shareholders for buy backs and dividends. >> take a step back for a second and tell us more broadly.

is this home depot a great operator or is this home depot a barometer of the economy and consumer. >> it's both. we'll hear from lowe's tomorrow. another solid report as well. home depot is a great operator. they have been operating well for the last several years but behind that as you eluded to the home improvement mark in the united states is like this at this point. >> what's your price target on this company. >> we have 115 right now. the stock is quickly approaching that. >> are you going to change it? >> we'll see. >> does that mean today you're going to change it? >> i'm sorry, what's that? >> does that mean today you're going to change it. >> we always look at price targets as an on going strategy for us. >> we'll leave it there. thank you for joining us this morning. >> thank you. >> coming up scientists find something strange inside an ancient buddha statue.

but first as we head to break a look at yesterday's s&p 500 winners and losers.

♪ welcome back everybody. we're checking out a few of the stories that caught our attention. i don't know if you saw this story yesterday.

a thousand year old mummy that was found inside of a statue. here's a picture of it. it revealed a mummy and i thought that was weird enough it caught my attention yesterday. what i didn't realize on a first glimpse of this is they think this was done through self-mummification. it's a process that involved being buried alive inside a chamber while meditating. the object is a rarity. he was mummified and probably kept in a monetary for 200 years before he made a statue. originally it was discovered in china but it can be seen at the natural history museum in budapest. >> that's going a long way to get, you know -- i'm not doing that. you would eventually not breathe i think which would be not a great way to go. mummy, it was one of the answers to jeopardy last night.

there was a whole category. every word had three ms. mammal mummy. it's hard your on the spot. >> minnesota mining and conferring. >> it's just every question. >> millennials don't watch. >> i think they do. >> they don't was of alex. >> it's a generational -- >> you don't watch either. >> no it's pretty clear you don't. yeah anyway -- >> thanks. >> a lot of knowledge. >> i could learn if i just watched the show. what did you learn in the near post today? >> i haven't picked a piece. >> i'll tell you about a story in the new york times. >> sean penn got in a lot of trouble. >> what did he do? >> he's trying to be funny. he's an idiot. about the director saying where

did he get his green card about the gentleman that won three oscars. they gave him the job of introducing the most important, you know oscar and just off the cuff he said that beforehand. it was really inappropriate and really stupid. you would never say that about someone from britain would you? it was really stupid. >> do you have any comment on that or are you just afraid -- >> i'm not going to go there. story from the new york times, sec -- >> not your column. >> not my column. we're not going to talk about my column today. we could if you want. you should all read it. >> or not. >> this is about the sec and i did write a column about this two years ago warning that this could happen but they went out and did the reporting to figure out what happened which is that mary jo white was a lawyer. her husband is a lawyer. and there was always a worry that she would have to recuse herself of lots of cases and

that could become a problem. well it has become a problem in dozes of cases where she can't participate in either a vote or sometimes there's a five person panel that has to vote on what to do something about and it's deadlocked and she wants to more more bigger financial penalties and things like this and people are using this to their advantage. there's even a reference to this idea if you're a financial institution that might be process prosecuted you should have her so she would have to rekuz herself. it does a great job of all the different answers of what those problems represent. not my column but there's a great column in the new york times today. >> john legend is millennial. >> he seems older. >> maybe but he watches. >> he does?

>> yes, he's a good guy. >> how do you know? >> because i was with him and he watches. >> he is a former consultant at bcg. >> yeah. >> went to penn. >> i don't think he's a millennial though. >> maybe not. but to me he's a millennial. >> he's 36. >> is that a millennial. >> no i'm 38. we're not. >> well i think of you as one. >> you're ancient. >> i know. me and john voyt think you're a millennial. >> you guys are watching jeopardy. i don't know what to do. >> you're not watching jeopardy? >> no. >> well you're watching wheel afterwards, aren't you? >> no. >> what! >> no. >> i don't even. i can't. >> you watch jeopardy. >> i will. >> you might learn something. don't do it. >> anyway when we come back this morning, marijuana becomes lee

fwal legal in another state today. the wild details after this. plus the story behind a massive jump in profits at the nation's largest luxury home builder and a warning from a financial analyst. why they fear another financial crisis is just around the corner. squawk box will be right back live from the heart of midtown manhattan. stick around. ways obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. there's nothing more romantic than a spontaneous moment. so why pause to take a pill? and why stop what you're doing to find a bathroom? with cialis for daily use, you don't have to plan around either.

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in our house, we do just about everything online. and our old internet just wasn't cutting it. so i switched us from u-verse to xfinity. they have the fastest, most reliable internet. which is perfect for me, because i think everything should just work. works? works. works! works? works. works.

welcome back. today alaska becoming the third state where it's legal to grow own, and smoke marijuana. but smoking pot in public will still be illegal. adults 21 and older will be able to possess marijuana and grow up to 6 plants at home but don't go on the streets with that stuff.

>> the home builder toll brothers well above what the street was expecting. the estimate was for 30 cents. toll sold more homes at higher prices. joining us right now is an analyst with citi. thank you for coming in today. >> thank you for having me. >> so the numbers were a little better than the street was expected. they were better than you expected too. what happened. >> closings came in better. so did selling prices overall. toll had good cost controls. relatively solid and in terms of their net contract activities we get into the early second quarter for them. it's been pretty solid. >> you had a neutral rating on this before am i right? are you considering changes that based on the results? >> the deviation was not large where i would think there would be a big move. one of the issues i have is they're trading at mid cycle multiples. with midcap builders you see it trading closer to the books.

you have enough where you might be able to recover the valuation gap caused by trading liquidity. >> what names do you like? >> they're trading about one times book. descent 3% dividend yield. mta is just right behind it. a little bit more risk because of the exposure. >> we talked a lot about the housing industry and some of the weak numbers we have seen recently in the national numbers. have people trying to figure out why millennials aren't buying homes as quickly. what's your thesis? >> a delay in life. people typically have children about ten years later than they had 20 years ago and that's a key driver highly correlated to when people choose to move and go into homes. in addition if you look at home ownership it increased by 3 per percentage points but it's a long healing process. that's also what it comes down to. >> we talked about student loans

and how much more debt people are carrying once they get out of college or even once they have not finished college. does that in anyway you think add to the slower purchases of homes? >> i mean there's been a lot of analysis there. that's interesting because typically those homes generally have higher incomes to cover the burdens. it takes a longer period of time because the average person now has a four year degree where as if you go 10 or 20 years back they had a 2 year degree if not just high school. >> so how would you judge or grade the home industry right now? >> i mean it's been tough. we've had about -- i'll call it a million household formations over the past years on average. a lot is more rental stocks. you had some of the single family shift in general. so it's been tough. it's about 15% tighter than even in the 90s. so it's been more difficult to form households. job growth has been great. >> janet yellen is speaking today. if the fed raises rates in the next 3 to 6 months what does

that do to the housing market? >> it depends on the increase. if it happens rapidly we could see another event like we saw in may of 2013 where housing froze for a bit or paused if you will. obviously that would be a negative and historically it's not been good for the builder stocks when you have a 50 basis point move or better. if it's slowing gradual and you have job growth that comes with it historically based on precedent it shouldn't be a big deal. >> thank you for joining us. >> thanks for having me. >> all right. up next is another mortgage melttown onmelt meltdown on the horizon? is it going to be caused by the new rules put in place to keep the system safe? that would make sense. that disturbing story after the break. but first check out today's squawk planner. at 9:00 eastern the home price index is out. at 10:00 janet yellen will head to capitol hill to testify on monetary policy. also worth watching mario

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[thunder and rain] [thunder and rain] [thunder and rain]

welcome back everybody. let's tell you about a stock to watch today. the fda giving novartis the okay to treat patients that relapsed after aggressive blood cancer. >> big question this morning is another housing crash on the horizon? our next guest believes a perfect storm is brewing that could spark another mortgage melt down. she capital markets equity research analyst and joins us to layout his reasons for this forecast. we read this. you put out this report. what's happening? >> well basically if you think about the last seven years you realize that the bank versus paid you know maybe $100 billion in fines and other penalties related to mortgages. they were put -- loans were put back to them in the tens of billions. it was something called the qualified mortgage rule that was

created that requires people to put down 20% to buy a home and also they can't have more than 45% of all their debt payments as a percentage of their total changes in the way the banks have to have capital against certain mortgages. there have been changes in the secure rules. in essence you find the banking industry is reluctant to make mortgage changes as they were in the past. many banks have admitted to me they simply can't make money on mortgages. so the net effect is what the industry wants is to make mortgages which they can sell to fannie mae and freddie mac. but they want them out of business by 2017 2018. if we're talking about 30-year fixed rate mortgages which yield less than 4%.

who's going to be crazy enough to -- >> for a long time we talked about whether the 30-year fixed mortgage makes sense. in a private market it probably doesn't. then therefore the question becomes, does a market emerge far 5-year 15-year and what does that do to the mortgage market and real estate prices. but you think that's coming. >> i think if you think that the 30-year fixed rate mortgage doesn't make sense, you think housing crisis in the united states don't make sense, right? because if you think about how people buy houses they pay houses based upon what they have to put down and what their monthly payment is. if you make the decision that they can't have 30-year fixed rate mortgages any longer then they're going to have 10 or 15-year available rate mortgages, it will raise their payment substantially. if you raise the payment substantially, you're going to lower the prices of housing. and nothing just lower -- >> do you think there's a market for 30-year fixed? do you think that could exist?

or do you think it's crazy to offer something like that without a government guarantee? >> i don't think there's a private market for 30-year fixed rates. i think that's the issue. >> what happened? canada? >> canada went to three to five-year term mortgages which in a sense variable rate in nature. there was only one other country in the world, i think denmark, that issues 30-year fixed rate mortgages. the issue is not whether they're good or bad. the issue is you have them. the issue is that most -- the large portion of people in the united states who own houses own them as a result of a 30-year fixed rate mortgage. so you say, okay fine. these things don't make sense. it's a ridiculous product. the only people who will buy it will be the united states government. so let's get rid of the people who buy them. let's get rid of them. what happens to housing prices if you get rid of them? is the united states ready to take a shot to housing prices

because we're getting rid of 30-year fixed rate mortgages. if we want to go to the canadian experience, we can do so. the average mortgage in canada has a three-year maturity. all right? we can do that. but what happens to housing prices when you go from here to there? have you thought about that? >> i haven't thought about it enough. you're scaring me a little bit. my other question though is right now what percentage of mortgages that originated are 30-year fixed relative to all the other products? >> i can't tell you the answer to that but i think it's about a third. i don't know exactly. so i can't answer the question the way you would like. but what i will tell you is that virtually 100% of them are sold to fannie mae and freddie mac. >> is there any chance that they stay around longer than we think meaning we re-capitalize? >> at the present time no.

i mean basically we're in schizophrenia concerning fannie mae and freddie mac. take a look at the statistic. they borrowed from the united states government. in return for that they paid back $225 billion in cash. they have issued a series they preferred which is worth $190 billion. and they have warrants which the u.s. government owns which i think are worth $20 billion. so in essence, fannie and freddie are sitting there with somewhere between $425 billion and $450 billion which they've given back to the united states. >> that's a lot of money. >> it's a lot of money, but what's kind of interesting is the united states government wants to eliminate the $190 billion series a preferred and the warrants without giving the taxpayer anything for them. >> dick before you go i've got to get you on one other topic

which is jpmorgan. they have their investor day today. there's also an article in "the wall street journal" today saying they'll be telling certain clients you have to pay us to keep your money. effectively they don't want to keep the money. how's that conversation going to go and what's that going to do to their business? >> it's probably not going to affect the business too badly in any fashion. if you're sitting in europe and you're a corporation and have a lot of money deposited in europe, you're paying money to the bank to hold that deposit for you. so what you're going is taking that money and putting it in the united states. and the banks in the united states are losing money on it. so essentially they're back to new york who has been doing this some time. they're going to charge you a fee if you want to put that money, park that money in the united states until the europeans get rid of negative interest rates. i think it's a good move on the part of jpmorgan because, you know, you can't take this cash. you know, the banks in the

united states have been nationalized on a de facto basis. and the fact is they have no control over their balance sheets. at the present time they're being forced to take money in at high costs in the long-term market. and lend it to the federal reserve so the federal reserve can buy bonds with it. you know we've completely restructured the financial system in the united states in a fashion which is unbelievably harmful to the american consumer. >> on that note dick bove thanks for joining us this morning. coming up, quarterly results from our parent company comcast. media news next. plus will apple become the first trillion-dollar company? dominic chu has the stats you need to see to believe. plus, you've heard the promises. self-driving cars. that's the future. but how far away is that technology from the masses? our auto reporter phil lebeau was pounding on the window a

couple moments ago, but he will be on set with us. seemed like some crazed maniac out there. which is not that far from the truth. he'll be with us on "squawk box" when we come back. claims! legend has it these hills are full of 'em. it can take months for an insurance claim to surface. claimin' takes patience. aflac paid my claim in one day. they got some new-fangled kinda one day payin' machine? hehehehe yea, i got aflac at work. aflac... in just one day, we approve and pay. one day pay, only from aflac. aflac... the lightest or nothing. the smartest or nothing. the quietest or nothing. the sleekest... ...sexiest ...baddest ...safest, ...tightest, ...quickest... ...harshest... ...or nothing. at mercedes-benz, we do things one way or we don't do them at all. the 2015 c-class. see your authorized mercedes-

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key phrases to listen for when janet yellen testifies on the hill today. patience mid-year inflation too low, and labor market strong. we'll tell you how they expect the market to react. comcast and dominos set to report this hour. we'll bring you the numbers and the market reaction. and we asked millennials watching "squawk box" to respond on twitter and it was a ground swell. we'll tell you where millennials are investing and outline the challenges unique to their

generation as the second hour of "squawk box" begins right now. live from the beating heart of business new york city, this is "squawk box." >> good morning, again, everybody. welcome back to "squawk box" here on cnbc first in business worldwide. i'm becky quick along with joe kernen and andrew ross sorkin. we've been watching the futures and after a mixed day yesterday, it looks like things may be slightly positive at least for the dow and s&p 500 futures. right now dow futures up 14 points. the s&p up by less than half a point. nasdaq lower by 3 points. >> all right. looking at some numbers that are hitting the wires from our parent company comcast. can't tell where the stock is going to trade right now. the spread is fairly wide. you can see it's down about 99

cents. the company just in terms of results is a penny shy of expectations. adjusted net was 77 cents. that was 17% above the fourth quarter of 2013 but the estimate was 78 cents. there are, though some below line items including larger depreciation and i don't think the street would have any visibility about that number. so i don't know whether you would say that's a penny below or not based on larger depreciation. for the year the number was $3.20 and that was 25% above the $2.56 reported in the prior year. we should point out that the dividend is being increased 11% to $1 a share annually. that's the seventh consecutive annual increase. also announcing an increase in

our buyback to $10 billion and the company plans to buy back -- so it's okay with comcast? you're on board? >> i'm on board. if you're massively profitable enterprise and your revenue numbers aren't going down sure. >> all right. >> go for it. >> okay. >> should probably point out operating cash flow and free cash flow that those are metrics -- >> it's $4.25 billion they're going to reoperate. >> up $5.9 billion. it grew 6.9% to $22.9 billion. free cash flow up 18% to the quarter. it was down by 3.8% for the year. company says it was investing in its business. cable, it looks like had increases. >> but advertising is still -- it's distribution. >> i'm talking cable company itself. added in the fourth quarter. third too imin the last five

they've added subscribers. >> then you look at cable network revenue was basically flat i think. in 2014 it was up 3.9% driven by an 8.2% distribution revenue. but a 1.2% decrease in advertising revenue. all these numbers have to deal with sochi. tough go back to a year ago. olympics were going on. so if you see a drop, it's probably not as big as it would have been. >> theme parks, revenue up 29.9% in the fourth quarter. operating cash flow up 37.6% to $352 million largely because of the wizarding world of harry potter. >> remember when they first bought the company, they didn't even want the theme parks. >> i know. and you could like market to market based on a blackstone sale and it was like ten times

soo another this point of what it was. they got a good deal. i mean it was really good. >> yeah. a. some progress in the greek saga. athens taking its plans to the eurozone overnight. reuters reporting a pledge not to rollback and a promise to ensure that state spending doesn't hurt its budget. also we should tell you the justice department are reportedly now investigating at least ten major banks for possible rigging of precious metals markets. "the wall street journal" reporting that the d.o.j. prosecutors are looking at the price setting process for gold, silver, platinum and palladium. and then opec might call an emergency meeting before the next scheduled meeting in june.

then a drop as traders questioned those reports. prices rebounding slightly in early trading. you're looking at wti crude right now at $49.80. the nasdaq is up nicely year to date so far, but where is that upward movement actually coming from? dom chu joins us now with more. >> you look at the nasdaq composite, a big influence there. if you look at year to date over the past year up over 15%. they're up about the same amount. just about 4.5% 5% year to date as well. they're mirroring each other. the reason why is there's a handful of stocks that are accounting for every single gain. now for the nasdaq 100 index,

the biggest stocks in the composite, the index is up 215, 218 points so far year in date. all of those points are accounted for by five stocks. just five. and here they are. netflix shars, we know they're one of the best performers in the s&p and in the nasdaq so far. they're up 38% year to date. it's adding ten points to that 218 point advance. tack on now on next one, gilead sciences. up 11% year to date. that's another 15 points. 25 points just those two stocks. then big influences here. biogen idec. up 20%. one more here amazon.com up 22%. that's 35 points of the 218. and then you add it all together and the one you mentioned before apple. up 20% because of its sheer size of the 218 points the nasdaq

100 is up just year to date 140 of those points are just apple. so you total all of these together and then you have about 218 points. that accounts for all and a little bit more of the entire gain in the nasdaq 100. so 95 stocks up and down pretty much flat. these guys account for all the gains, joe. back over to you. >> we will need a party if it hits a trillion dom. you know what i mean? >> it will be balloons and confetti all over the place. >> we've thrown parties for a lot less. >> we put on hats for dow 18,000. >> we did. we'll figure something out. i'm not convinced. i don't know. we'll see. we'll see. >> it's stunning to see that though. five stocks make up the bulk of the gains. you better hope those five stocks do well if you're investing in the index. supposed to be the reason you invest in an index is you're not tying yourself to any few companies. >> amazon as apple's valuation

is reasonable amazon's is -- >> unreasonable. >> building a hell of a company. >> the numbers don't make sense. they've never made sense. >> no. >> if you build it they will come. and anybody that's bet against him has -- >> if only we had a sound track of him laughing because he's laughing all the way to the bank. [ laughter ] >> ask and you shall receive. >> anybody who's shorted the stock know what he's doing. [ laughter ] jeff what about baron? [ laughter ] i mean again, again again. [ laughter ] he doesn't come on anyway. you know jeff? you don't come on we're going to keep playing it. fine. suit yourself. [ crickets ] >> joining us now with more on the markets and his fed

expectations is paul ebner. thanks for coming in today. >> thanks for having me on. >> let me get this straight. you think valuations when you look at the markets overall are starting to look a little rich. >> we found that the global equity markets have looked stretched for some time now. now, in many cases that stretched valuation can be supported by risk appetite. what worries us is that risk appetite has started to wane in the last several months. we manage a long/short portfolio. we view right now more attractive opportunities from our stock selection, our industry and country positioning than from just owning the net market. we're now flat to the market. >> which countries do you like? which stocks do you like? which jump out at you? >> starting the year we were long europe. we continue to like pockets of europe. the recent run over the last few weeks have brought europe closer in line to where the u.s. has been. we continue to like germany. parts of spain.

we've been underweight or short france and the uk and italy as well. >> when you say that there are stocks, can you tell us about some of those stocks or the sectors that are better positioned as well? >> sure. on a global basis, we've liked companies that are more on the cyclical side. we think the economy is still growing. we like materials. we also like within the materials we like packaging. we like the diversified metals. the china slowdown in overplayed and there's good value there. we also are short right now consumer-oriented stocks like retailers. there's been a lot of pe expansion in those names since mid-october on expectations that lower gas prices are going to sort of further more consumption. we haven't seen signs that consumption is actually happening. i've talked in the past about the internet activity we track. those leading indicators haven't shown consumption and also

actual numbers that came out. let's say retail sales in december and january have been disappointing. >> jim cramer's been pretty high on some of these retailers. i think with some good reason too. you talk to a retailer like terry lundgren and he will tell you he was slowly starting to see people spend again. but that it takes some time. when you're saving $10 to $20 a week, it will take time before you feel more flush. they're hoping they can get more of that. you don't think that's ever going to materialize? >> it's not that we don't think there won't be higher consumption, that's already priced into the stocks at this point. so the pe on the retailers and s&p have expanded from 20 to 25. over that period the s&p has gone from 18 to 18.6. >> why don't you believe the china consumption concern story? >> it's not that we don't think china isn't slowing down. it's that we think that the fears around that slowdown are overpriced into the stocks. so we own some diversified

metals, we own some steel. we own other materials companies that are tied to the broader global economy. >> you said you were market neutral. does that mean you were short neutrals? >> right now within the u.s. we're short the consumer stocks that i mentioned. retailers in particular. we're short -- net short french uk italian stocks as well. there are pockets within those countries. so within europe even within france, we still like the exporters. so the european -- the euro being weak has helped the exporters with their sales. we like the domestic parts of those economies. within uk within france stocks more tailored to domestic consumption. >> all right. we want to thank you for joining us today. >> thank you for having me. >> nice to see you. coming up when we return why driverless cars pose a concern to auto brands. phil lebeau will join us next. then former fcc chairman michael powell will weigh in on net

neutrality. and then we reached out to millennials millennials. they tell us they are watching and investing. we'll tell you where they're putting their money to work when "squawk box" returns in just a minute. e financial noise financial noise financial noise

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7 points. the s&p 500 unchanged for now. joe? >> yes andrew? >> what's going on? >> oh. >> it's your turn. tag, you're it. >> i'm so -- i mean it's just odd. why did you do that? you scared us over at the window. >> you're telling me i'm the first crazy man who beat on the windows? >> no. but the thing seemed like it was going to come in on us. you know if someone did it hard enough. anyway let me introduce you in the fashion to which you're entitled, you deserve. >> thank you. >> the move towards driverless vehicles could be the end of the road for some legendary auto brands. i worry about a lot of reasons why detroit, the future 20 30 years from now it just makes me wonder. >> it's not just detroit. it's the mass market brands. if you look at this new study

that was done, i've talked with them about this. his belief is you go out to 2030 and that's when mass market vehicles take off. if you truly believe that people are going to use autonomous drive vehicles on the mass market, they're going to want their other vehicle to be a premium brand or their autonomous vehicle to be a premium brand or a tech brand. like a google or an apple. >> so it would be an uber autonomous vehicle. >> yes. they're taking over the world. >> you call a car and it comes. it would be like a ride at an amusement park. >> in theory that's it. and the idea being if that happens, your mass market brands, you're talking about your chevys your fords, your hondas, your toyotas. any of those that are serving the masses right now, people will sit there and say, well i don't want something that i'm going to buy on the lower end since i'm just using whatever

autonomous drive vehicle is going around. therefore, there are going to be fewer sales for those brands. and one or a couple of those brands -- i'm not saying those specifically but the mass market brands will struggle. so that's the idea. that's the concern. >> when do you think this happens? >> i think 2030 is probably a decent guesstimate at this point. i don't think we see autonomous vehicles until well past 2020. the technology will be there. i don't think the regulators are ready for it. you're looking at something around 2022. i don't think so you see it really getting to the point where you may be calling from your house saying i need this vehicle to pick me up here. it drops you off, it finds a parking space. that doesn't happen until 2030. >> that actually happens in 2030? >> i think people think it could. >> is that the end of uber then? that sounds like a threat to the ubers and taxis. >> i think uber and other

services are going to have more competitors by then. i know uber is the name everyone is grabbing onto now. but there are other names that will come into the markets. names we're probably not thinking of right now. you may even have auto makers who say if we're going to compete here maybe we go in that direction. one of our brands becomes an uber-type competitor. i mean that is a possibility at some point. >> all-self-driving boats by 2030. as the tidal waves from the warming come up. right? i mean, on this coast. no doubt. are you on the third floor? how high up are you? >> i'm high enough for the water. >> i hear one of you might be in the market for a new minivan. >> no i have one. >> you're set? you're okay? i'm told these things. >> that was a good segue. can i do my job, though please? >> i'm sorry. >> watch this. >> you're like a professional. >> phil also one to get your

take on the rise of the $55,000 minivan. let me try that. phil also want to get your take on the rise of the $50,000 minivan. >> well it's not here yet. but we're moving that direction. >> it's close. >> you can go to the high 40s right now if you trick out a minivan. and you look at the new town & country, the reason they got rid of the dodge caravan is that it's the mass market. and it starts down around $21,000. sergio doesn't want that. sergio wants the high end. and that's why chrysler said why are we having these two compete with each other. go to the higher end. >> you're talking about a $50,000 minivan. does d.o. some of the luxury brands ever make them? if toyota does it with lexus, would they create one? or bmw?

>> i don't think so. i don't think the luxury brands will ever create a minivan in part because it's such a limited market. and what they would have to make to crack that market when you have toyota and honda dominating it. >> but you have families -- >> you can't get a low end minivan. you can't get a cheap one to go anywhere. >> no. those days are gone. >> you don't even want a minivan. and if you do get one, you pay a fortune. >> there are those that will pay $70,000 for a minivan. >> you can do that in europe. those are bigger vans. not necessarily minivans. >> there was a part in "get shorty." someone convinced danny niny devito it was a luxury minivan. it doesn't work phil. it's like don't even try. that's impossible.

>> i'm past the minivan days. i'm sorry. >> i have one. i do. >> i know you do. i drove it yesterday. >> you have said you don't want to live if you had to drive one. >> i used to have one. i loved it. >> maybe that was me that said that. >> probably was. >> kill me. >> you want to show me how it's done taking it to break? >> but becky's going to do that. don't pound on our window anymore. >> it is lovely to have you here in person. when we come back this morning, forget what you've been told about children and peanut allergies. app surprising new recommendation. then michael powell will be here to talk net neutrality and media consolidation. stick around. "squawk box" will be right back. no. you? no. aflac! what are you guys looking for? claims! legend has it these hills are full of 'em.

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peanut allergies can be prevented by feeding infants peanut products. the number of peanut allergies has quadrupled since 1997. the study which was published by the new england journal of medicine says the results are so compelling that guidelines for feeding infants should be resurprised soon. for years doctors have been telling you not to feed your children any peanut products until after they turn 2 years old. coming up we'll have a rundown of this morning's big stock movers. plus former fcc chairman michael powell going to weigh in on the net neutrality vote coming this week. seems to me like it's coming to a head. there's a lot of talk about whether this is going to happen the way they say it's going to happen. we'll see. as we head to break, take a look at u.s. equity futures. e financial noise financial noise

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welcome back to "squawk box," everyone. a california agency will vote today on reducing the state's gas tax by nearly 8 cents. but even if the change passes suppliers are not required to pass the savings along to consumers. a new jersey judge striking down chris christie's plan from the pension system. he proposed the cuts to plug a revenue shortfall. sounds like he will appeal that ruling. and don't fear the tax man. the number of irs audits of

individuals fell more than 21% over the last five years. and two pedestrians in seoul, south korea, disappeared into a sinkhole. all caught on tape. captured the moment. and tried to cross the street. both the man and the woman suffered minor injuries and were eventually rescued by firefighters. officials are still investigating the cause of the sinkhole. >> when you said it -- if it was like to never be seen again, that would be, you know? walking along one minute and the next minute you're just -- >> yeah. >> this one caught on video. >> it's like a trap door in the ground. >> who was pointing the camera right at those two people. >> it looks like it was a standard camera monitoring things. >> they're everywhere. i think they should be

everywhere. in europe even more so. >> video everywhere. >> we're comfortable with cameras. they could be everywhere and i wouldn't care. maybe not the bathroom. or not. >> yeah a little tmi. let's talk about where all the cameras are going, where the video is going, what it means for net neutrality. gearing up for a key vote on net neutrality this week. if it happens, telecom trade groups are likely to sue. randall stevenson. joining us now is former fcc chairman michael powell. he is currently the president of the telecommunications association. in full disclosure ncta who represents universal and comcast which of course is the parent company of cnbc. good morning, michael. >> good morning. >> so are your lawyers staying up all night already preparing to file suit? what's going on.

>> well i do think unfortunately the next phase of this long tortured net neutrally event will likely be litigation. so we're going to wait to see what the fcc order actually says and does. but we think it's likely that there will be an appeal. >> so one of the things we've all talked about is what an appeal looks like and how long it takes and what that does to investment in -- during that period. we heard from the ceo of at&t who says he plans to pull back. can you speak to that broadly from all of your constituents you've been talking to? >> sure. i think to put it briefly, litigation with fcc appeals is a pretty long drawn out process. i would predict that it's at least two and up the five years before the rules are fully and finally settled. the original classification decision went all the way to the supreme court and took a good 3 1/2, 4 years. if you look at the current in

2010, it's 2015 and we don't have a new set and this debate a hz gone on for a decade. it's one of the reasons we believe this issue's right for congress to fix which would moot all the litigation. and of course from an investment standpoint companies have to understand what the settled nature of the law is. they've understood that the -- they've understood the law for 15 years and suddenly that's going to be radically transformed to a new style of regulation which is going to prompt a whole myriad of questions that are going to weight answers. i think that's going to have an impact on investment choices. >> although michael, congress seems to have no appetite in terms of picking this up. >> interestingly enough to my great surprise and pleasure i mean the republicans in congress have put forward working drafts that would go a long way to protecting strong net neutrality just as the fcc has said it wants to do. it's working to find democratic support. i think everyone is waiting to see what the order actually

does. i think when congress realizes that the order goes far beyond protecting net neutrality and in fact introduces a new regulatory regime for the internet there may be growing interest in trying to find a solution. >> michael, as you have sat back and watched this. was there ever a time where you said holy camoly where you said i cannot believe this is actually -- to me i'm watching it i can't believe that this may actually happen. 1934, the whole nine yards. is it -- did it -- was it shocking to you that this happened like this? >> i think it's fair to say we are shocked. when you look around the table with our ceos they ask what did they ever do to deserve this kind of regulatory intervention. they've never blocked content. they've never done any of the things that they are protecting. for three decades. we've been retreating from this regulatory model in virtually

every space of communication. they're going to now apply that regime to the most dynamic, innovative, free in history. >> when does wheeler get hit with some of this? right now it's got to be sinking in to him. he might think okay i'll buckle to the president on this. i got these 4 million covered from people. but when the adults finally speak up in the room and he sees the actual -- you know what the end result is going to be won't he say maybe i need to rethink this? is it too late for that or we're going headlong into this? >> i think they're locked and loaded. they're going to vote on thursday. when you talk about the moments of shock i think watching the president of the united states come on a youtube video and direct the fcc to adopt a specific regulatory result, i think that was shocking. i think it put the commission in an unattenable position to do anything other than -- >> does wheeler say privately

that he's in an unattenable situation? is he going to look at this -- when history looks back at this is he going to say he was proud of this decision? or is he going to say he was forced into this decision? >> well i don't want to speak to how he'll interpret it. he says it's in line with his thinking. but we multiple times saw the chairman was moving in a different direction. it was external for us that it ended up punching them back toward this direction. whether it be john oliver in the comedy skit that led to 4 million comments or the president's own intervention. it has been a sad example of i think, unreasoned decision making. >> is there any chance that the legislation is not as tough as we think it will be? the regulation. meaning we'll see it on thursday and somehow we can be surprised. i don't think we will but i'm curious if you think that's even

a possibility. >> i think legislation can be strong if we're all focused on the original task which is do we want to protect those four core net neutrality principles. i think that's an easy deal to achieve. but if what people are really quietly asking for in a bait and switch way is let's move from a light regulatory environment to a regulatory environment over the internet that's a bigger nastier question. and i don't think you're going to get any consensus with republicans or business around that direction which is the one the fcc is taking. congress will have to be protecting strongly which we would foully support. yet not impose a backward looking regulatory model on the dynamic internet. >> just in terms of the economic impact for all the companies you represent, how do you see them sort of trying to get through this?

what does it look like? >> what i like to say is, look, these companies aren't going to try to stop serving consumers and stop investing in total, but the regulatory overhang will pull back the more dynamic innovative offerings. >> and does the profit margin come down too? >> well that's to be seen. i mean i think it has a lot to do with whether they retain full flexibility around pricing. but the fcc is even though it's saying it's not regulating rates, it's creating the regulatory foundation that allows them to regulate rates should they want to. if there's a federal regulatory oversight of race in any way, it could affect profits and margins over time. sfl michael powell thank you for joining us this morning. >> thank you. >> come on back after thursday to see what they say. we'll figure out what to do. >> will do. >> when we -- you know we elect presidents but then we always have divided government a lot of the times too. so you see checks and balances.

liberals always talk about supreme court appointments. how important those are. in fact, they're trying to railroad poor justice ginsburg out so obama can put in another. i don't think she should but there's a lot of pressure on her to do it. who would have thought that the appointment of fcc commissioners would have this unbelievably influential impact on our lives? so we have to think about that even though we have divided edd government. >> what would have happened to wheeler if he just said no? >> that's what i expected. i expected he would have to prove that the agency was independent. i expected he would have pushed back even harder. gone the other direction. >> they're looking at us like what are these people doing. the editorials in "the new york times" think this is just the greatest thing that ever happened. finally doing the right thing

for net neutrality. bizarre. there's cat people and there's dog people in the world, right? >> we'll see where everything lands. we should tell everybody wier going to talk more about net neutrality rules and new rules in the next hour with david karp. he's the ceo of tumblr. also coming up, "squawk box" fans from the millennial generation sounding off on twitter. we'll take a closer look at their spending patterns and how to profit from them. stick around. "squawk box" will be right back. what does it mean to have an unlimited mileage warranty on a certified pre-owned mercedes-benz? what does it mean to drive as far as you want... for up to three years... and be covered? it means your odometer... is there to record... the memories. during the mercedes-benz

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the answer is yes, it can. so, the question your customers are really asking is can your business deliver? oh! do you believe that? i said it and there it is. millennial "squawk box" viewers sounding off in the last 24 hours. we're taking a closer look. are young people active investors are is wall street in danger of a lost generation? sharon epperson joins us now with more. we started this yesterday, sharon, because i -- i don't know where they went in terms of

tv in general and cable in general. and all of media. >> they went to their ipads. >> which is hard to measure. but i was worried that they -- because of 2008 they're just shell shocked and they're sitting in savings accounts and they're going to miss the boat on what could be a good stock market. >> they already missed the boat. five years. >> that's the only way to say. >> let me tell you what the studies are saying. we're talking about millennials between 18 and 34 years old. they're likely going to manage a lot of money in the years ahead. they'll control $9 trillion in assets by 2018. their habits are being studied closely. commissioned by the consumer federation of america and a few other organizations found almost half of millennials have a savings plan. more than half of them are saving at least 5% of their income and nearly 2/3 have an emergency income. but are they investing? the sans not so much.

according to a recent study, millennials are mostly sitting in cash. that's where more than half of their money is. less than a third of their assets are in stocks. and retirement is certainly a top financial priority for many millennials. that's what they say. but they have a bigger burden than a lot of other americans right now. due to student loan and credit card debt. they're more focused on paying down debt right now. and they're also not as focused on stock market gains. they don't care about that because they're worried about the here and now. >> how different is this generation from other generations? i'm assuming people from 20 to 30 were never putting money in the market. >> exactly. you're thinking about what your immediate needs are right now. i remember actually being in this building when i was in my 20s when i worked for "time" magazine, i wasn't really worried about my 401(k). i didn't know about it until someone who was older told me about it. >> everybody coming out of the school was going to wall street back then. now they're going to silicon valley. i knew about stocks when i was 22 years old.

>> i think you were a -- >> 2008 made it different. i'm telling you. the whole buy and hold strategy was questioned. >> something else making it different. when you look at studies looking at people who are in their 20s in a 401(k) plan they are in equities. they are mostly in equities. 85% in equities. but they're in a plan that has a target date fund. they're kind of exposed to the market in a different way. so when they're trying to figure it out on their own either working part-time, consulting on their own, freelancing, making ends meet that way, they have to figure out other types of ways to invest. that may be more challenging. >> a way to fix this is to make a mandatory contribution. i was saying the same thing in any 20s. it was automatic and that was great. >> so many people are starting their own businesses. so if they don't know about a solo 401(k) or don't know about a roth ira or different options available to entrepreneurs, then

they're not going to automatically enroll in something like that and they'll be behind. >> can i call b.s. on the whole idea that millennials are not putting money in the market? i imagine kids today are smarter when they get out of school. they go to work at places that have 401(k) programs and other things that are totally different than when you got out of college. >> what do you mean? >> i don't believe it. if i got out of college in the 1960s that somehow those kids were more -- >> sharon just told you it's more in cash. she told you the numbers. >> when you look at the numbers, they are more in cash overall as an age group. so what i'm saying is -- >> is that relative to what it was in 1950 or '60? that's the question. i'm just saying i don't -- >> those people are dead. god almighty. you watch "key & peelle"?

say this guy's name. patrick patrick patrick o'shag hennessey. >> i hear that a lot. >> patrick o'shaughnessy is portfolio manager where they have $8 billion under management. >> more like seven. >> you? >> not me personally. it's a 40-person firm. >> it's called o'shaughnessy. there another one there? >> yeah my father. who you've met many-a-times. >> exactly. will you settle this? he's stubborn. didn't 2008 have a chilling effect on everybody's idea -- >> of course it did. i'm saying relative to the last 30, 40 years. >> when you look at the psychology know the expression once burned twice shy. that's true. all we've seen is stock market

crashes, stock market crashes, terrible job market. i think we are especially skeptical more so than prior generations. more akin to a depression baby from the 1930s. but i do think there's some element of young people doing the same things young people have done always. so it's a bit of a mixed message message. i do think they're more conservative than they should be. i think that's a result of what they've seen and witnessed with their parents' accounts maybe their own accounts in 2008. >> when you look at how much money is in index funds, in target date funds, and these are just -- you put it on autopilot and they're going to get more as you get older, definitely there are more people in the market. definitely than there were -- >> right. access to the market in the 1970s it was tougher to buy stocks. >> exactly. but the issue is how many overall in the age groups are accessing those types of funds? if you're not in a 401(k) program. and if you are in a 401(k)

program and are mostly in equities, is that a great idea? you do have other expenses that come up. you have student loan debt. are you then going to cash out of that 401(k) that is the worst thing you can do? >> no doubt the best thing young people can do is put a majority of their money in the stock market. there's no comparison. the stock market always wins over the kind of time horizon that we enjoy. 40, 50 years in some cases. so i think that is a no brainer. rule of '72. it's not what people are doing. further when millennials are investing in individual stocks they're doing it the wrong way like a lot of young people tend to do. they're buying the glamour stocks. buying what you know is a bad idea if you don't pay attention. but just like the lottery, we call these lottery stocks. some people win the lottery, but most people don't. there's always going to be an apple or a google but as a category, those fwla mor stocks do badly. >> patrick o'shaughnessy.

>> and you, you, you are not on the "today" show. you're here with us. >> i'm here on "squawk box." i love it. >> thank you for coming on here. >> i'm happy to be here. beautiful set. >> this is a one-shot deal? you'll be on again? >> no. >> when she's over there she can come over here. >> thank you. when we come back this morning, earnings alert. we will tell you about the stocks that are moving this morning after quarterly reports. that's right after this. you can call me shallow... but, i have a wandering eye. i mean, come on. national gives me the control to choose any car in the aisle i want. i could choose you... or i could choose her if i like her more. and i do. oh, the silent treatment. real mature. so you wanna get out of here? go national. go like a pro.

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welcome back everybody, let's take a look at stocks to watch this morning. home depot posting better than expected earnings and revenue. the company also raising its dividend and announcing a repurchasing program. also toll brothers beating the street as well. sold more houses at higher prices. that beat was significant. the stock up about 4%. a mixed quarter for comcast. revenue topped forecasts. comcast is also raising its annual dividend by 11% and increasing share buyback authorization to $10 billion. coming up when we return a read on housing from an economist who advises architects and a contractor turned tv host. we're going to talk renovations next. and the founder and ceo of tumblr is here. back in a moment.

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home depot beats but warns of currency head winds. we're going to take a closer look at the spring home improvement season to find out if momentum in the sector will continue into the warm weather months. the future of the internet at stake.

the ceo of tumblr takes a stand for net neutrality. and america on ice. another cold blast slamming the plains, midwest, and northeast. some areas grinding to a halt literally. we're going to break the ice and get business moving again as the final hour of "squawk box" begins right now. live from the most powerful city in the world, new york, this is "squawk box." >> welcome back to "squawk box" here on cnbc first in business worldwide. i'm becky quick along with joe kernen and andrew ross sorkin. we are less than 90 minutes away from the opening bell on wall street. futures this morning look

where does that money go? >> in what way? >> all of the money they will charge to get off their balance sheet. what bank will bank them? >> it depends on where they can

get a more favorable rate. they are to the seen as sticky under the regulation. you see the assets in cash. the second the market moves in cash and they are taking a position, these are not viewed as deposits by the feds that will be really tried and true and sticking around. >> i wonder the long-term implications. who picks that money up? is there a fee involved? who is the winner and loser? >> it becomes more expensive for the firms to hold the money. that is the end result. a lot of banks jpmorgan chase is one of the first. i imagine the others will be in the same treatment. >> thank you. he remodelling spending is increasing as homeowners make renovations and gas prices in the recovering economy. we see the trend continue. home depot reporting this

morning that results topped estimates. earlier this monday said it planned to hire 80,000 positions ahead of the busiest season. stock up 44% in the year. last week, one of the supplies, mohawk industries which makes carpet and floor coverings reported better than expected earnings. the company stock sitting above $180. cabmaker woodmark hit a 52-week high. let's get a home improvement outlook from kermit baker and scott mcgillavary is a host on hgtv. we had zero interest rates forever. how does it get better than this?

>> well it gets better than this because house prices continue to move back up. when house prices are rising, people are comfortable investing in their home. they have more equity to tap into coupled with the fact we had a pretty tough winter. i think a lot of homes need fixing up coming out of the winter. it will be a really strong spring. >> scott, how long have you been doing this and how do you characterize the current environment? it is like the best of worlds. what is that? the best and worst. >> the best of times. >> i don't get it. it should be the best. >> it should be the best. i have been investing in really estate for 15 years. we have seen ups and downs. what we are seeing right now with housing prices going up and some optimism there, people are starting to feel confident about their homes. confident their home is an investment and willing to put money back into it. as it goes up in equity to make the

improvements improvements. there will be a bump because of the loss in years. people did not want to invest. they deferred maintenance. when we see the housing market recover, people get confident and tackle renovations they want to and they address the maintenance. >> i guess it all sort of makes sense. you can almost draw a diagram. we have a financial crisis people are worried about their jobs and losing jobs and they don't do things with homes. home prices collapse. we are just talking about millennials being gun shy with the stock market. every aspect of our life is reacting to the shock in 2007 and 2008 scott? >> i agree completely. i, myself, am what i call a

leading edge millennial. i'm at the front cusp of it. as most of my peers and those younger than me enter the real estate market or purchasing stage of their lives, we saw a different picture of real estate than the generation in front of us. the generation in front of us saw optimism and investment and opportunity. we came in and saw a mess. so i think millennials are skeptical about real estate being the best investment. they are moving back in with their parents and renting longer or also the trend of condo living in urban centers. people are downsizing. they want to be in an urban center in a small place within my budget. >> what about that? we hear about people saying it is all back to the bohemian lifestyle in every city. i would not write off an acre and a nice house out in the

suburbs yet. >> i would not write it off, yet, either joe. millennials are slow in getting started. the tough market and gun shy after the financial crisis. we see the millennials slower in forming households. we see those who form households are lower in getting married and having children. the homeownership rate is the lowest in three decades. it is slow getting out of the gate. once they do we will see a big surge in spending. that will happen inevitably. >> the more you talk i think they all got their head on some stupid ipad. these millennials are different. is that what you are doing, scott? you have all of the stupid applications? you all playing angry birds? life is happening around you. form a household and have some kids. get out of your basement and off the internet. >> he has two kids.

>> you have two? >> i have two kids. >> it's not your fault. >> it's not my fault. i believe in really estate. i made most of my wealth investing in real estate. it is early to producer counting on a lot of the measurables we have for millennials. most have not entered the purchasing stage of their lives. it is hard to say this is representative of what all millennials will do. i think this group is entering a market at the time that the only thing they know is depreciating values of homes. they are not excited to throw the little savings they have at it. i think they are waiting and just like anything else i think there will be a bit of a sling shot effect being that everybody is holding back. as soon as we start to see confidence in the market and millennials can see the real estate is a good investment over the long term we will see a

huge rush into the market and bounce forward. >> kermit finish for me. there i go again. if i do something to a home add a bedroom or fix up a bathroom? what should i do to enhance value? what could you design? >> absolutely great question. >> the architects tell us kitchens and baths are the projects that generate the most return. you know i think we are getting more to sort of fashion of projects. we're out of sort of the roofing, siding window replacement projects that we saw during the downturn for energy efficiency reasons. and now we're more back to the style projects. projects that you want to undertake to make your home feel better, to accommodate your changing lifestyle. and those are the ones i think we're going to see the most surge in moving forward. >> all right. thanks, kermit. thank you, scott. >> you're welcome. >> maybe i'm wrong.

the expression is wasted on the young. i have this view of millennials. >> i think every generation goes through this. >> the hipster beards and stupid applications on the phones. maybe it's the -- tattoos ink. >> you do sound crank y i. >> i do. i've turned into this generation guy. i don't know. and you're the closest person to it. and i think that's why you take the brunt of a lot of this. >> thank you. >> i'll apologize. >> you want to do it right now? coming up next we're going to open up the "squawk box" platinum portfolio and find out why he says it should be in your portfolio. his picks after the break. and later, stifel buying stern

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welcome back to "squawk box" this morning. check out shares of macy's. retailer posting better than expected earnings revenue. macy's is giving a conservative view of the full year and it's a bit lack of consensus. the squawk platinum portfolio is back. now you can go online to cnbc pro on cnbc.com to track the managers' picks realtime and check their analysis. joining us now to share his top picks a oscar schaffer. it's great to see you. >> morning. >> i know you are somebody who is a value investor who's looking for bargains out there. is it harder or easier to find bargains these days? >> we run a fairly tight, conservative portfolio. if you only own 12 to 15 stocks the answer is no. >> you can find them at any

point in time. >> exactly. >> let's talk about your favorite picks. cojenf communications. >> it is a data provider and this is a company run by david schaffer no relationship that has literally lowered prices to its customers 95% over the last seven or eight years. recently it's been weak because there's a whole controversy about peering. and peering is where netflix is pressuring -- excuse me comcast, verizon, and the other providers are pressuring netflix to charge more for their services and therefore when you have a netflix account, when it comes into your house via cogent, it slows down. and that's because cogent it gets out of the mix. recently the fcc announced that goes away. we think the company is going to grow very rapidly again. >> in other words, you think

this overhang is something that is putting a little too much pressure on the stock. >> has put pressure on it but hopefully now if the proposal goes through it it will not. >> what if wheeler's proposal doesn't go through? >> it's only 5% of the business to begin with. and second of all, we think it will go through. >> okay. let's talk also about a company based in israel. nice system. >> it grows 15% a year selling on revenue earnings. in addition to which as a new ceo it has an underleveraged balance sheet. it's got an over-bloated overhead. with the new ceo who came in last april, we think that the company will decrease cost and increase leverage. >> if you only have 12 to 15 stocks that you're invested in at any point, you must have a very high threshold in terms of you really -- you have big convictions on these companies. >> that's the great thing about it. i've been ifn the business nearly

50 years. it used to be every idea sounded kind of interesting. now with 12 or 15 stocks the bar has to be very high to fit. surprisingly enough people think if you only have 12 or 15 stocks you have a lot of volatility. but the fund doesn't have commodity exposure doesn't have a lot of variability such that the variability month to month, week to week has been very narrow. and there's no intercorrelation between the stocks. so yes, high bar. but the key is to get to know the managements well. to pick companies that undergo change. either misunderstood in the industry. a new management. change in the whole industry structure. so, yes, we have fairly rigid criteria that makes the job easier. >> how often do you buy a new stock or sell an old one? >> we hold stocks two or three years. if i would guess, we own two or three new stocks a year.

as a consequence, we get to know the companies very well. it's a very high bar. we hold the stocks two or three years. and there's little volatility. >> let's talk about your third pick. that's interzion. >> it's difficult the way it's spelled and pronounced. it's called "interaction." >> interxion. >> i have done that before. we hold the stocks for two or three years, joe. if you had me on again, probably i'll be talking about much the same stocks. but in any case this stock just went through what i think is about to go through a transformative merger with another company. the company they merged with is intel city. they're going to own in an all-stock transaction. and there's going to be 40 million pounds or $60 million worth of synergies. one of the things it does by merging the two companies is the customers get bigger and bigger. now that you have two companies

together with great size to serve worldwide customers. i think it's got 50% here. >> does that mean the name's going away or it's keeping interxion. >> i should know that. >> oscar thanks for coming in today. >> thanks. by the way, a reminder for you, folks. go online to cnbc pro to track their picks in real time plus read exclusive analysis. coming up stocks moving the markets this morning. plus keeping commerce moving on the river. bitter cold temps in the new york area making shipping on the hudson a problem. we're going to go aboard a coast guard cutter showing you how they're keeping business afloat next. and also tumblr ceo saying they need to keep companies from slowing down the internet. when "squawk box" returns. sometimes romantic. there were tears in my eyes.

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welcome back to "squawk box." let's take a look at stocks on the watch this morning. toll brothers beating the street. the luxury home builder saw more houses at higher prices. also home depot posted better than expected earnings and revenue. announcing a new $18 billion share repurchasing program. and a bit of a mixed quarter for

comcast. comcast is raising its annual dividend by 11%. and increasing buyback share by $10 billion. nearly 70% of the northeast oil and gas supplies float up the hudson river and with subdegrees freezing temps, and lots of ice that is an issue. dylan dreyer is aboard the coast guard cutter willow that cuts so the barges can keep sailing. >> we are here on the coast guard cutter willow. that sound you hear is us literally cutting through ice. if we were to keep going north we'd end up in albany. south we'd end up in west point. we are right in the middle of kingston, new york. this is where the river tends to freeze. it is crucial to break up all of this ice which at time can be 13 inches thick because there are barges that use this waterway to transport about 70% of the home heating oil for the northeast. obviously with the winter we're

having, that is very very important. i was told by the coast guard crew that if the barges can't get up and down this waterway the folks in the northeast will last about three days with the heating oil they have and then there's no way to get more heating oil. that's why it is so important to break up this ice. this vessel is specifically designed with a steel hull that breaks through that ice. but the crews say this is one of the worst winters they've seen since 2004. it's already the coldest february on record for so many in the northeast. we broke record low temperatures yesterday morning. we broke record lows again this morning. unfortunately the cold isn't going to let up any time soon. back to you. >> absolutely right. it's cold because it's warm. thank you, dylan. still to come, fed chair janet yellen set to face a grilling over the hill over the policy and transparency. plus 150 million reason why stifel financial wants to buy

stern agee. he's not the coach of duke's basketball team but sounds like it. and then tumblr taking a stand on net neutrality. one of the first to do so. in fact ceo david karp joins us in just a bit. "squawk box" will be right back. i already feel like we're the most connected but i think this solo date will seal the deal. sure! i offer multi-car, safe driver, and so many other discounts that people think i'm a big deal. and boy, are they right. ladies, i can share hundreds in savings

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welcome back to "squawk box" this morning. here's what's making headlines at this hour. greece has reportedly submitted its list to lenders. that now needs approval before greece's bailout extension is final. we're less than 30 minutes away from the data on home prices. the report due out at the top of the hour. and then consumer confidence expected to be a slight drop from a month ago. in 90 minutes janet yellen will face questions from lawmakers on capitol hill on timing on interest rate hikes. so far the market seems to be awaiting those words. steve leisman joins us with a look at what's to come. >> good morning. there down fireworks today as

fed chair janet yellen makes her first appearance before the newly republican controlled banking committee and its new chairman richard shelby who directly opposed yellen's nomination last year. >> in light of dr. yellen's weak touch as a bank regulator and her strong inclination to print more and more money, i firmly oppose her nomination. >> shelby also opposed yellen's 2010 nomination to be vice chair. now the question is how much senate banking under republicans pushes to reform the dodd-frank reform bill and taking measures in the house that would force the fed to adhere to rules in making monetary policy and bills to audit. shelby will be a guest tomorrow on "squawk box." yellen also can expect a tough time from the left especially from massachusetts democratic senator elizabeth warren who excoriating the chair over the fed's failure to comment on living wills.

that's a mandatory blueprint for how a bank can be broken up in a crisis. >> what we need to do is to give them a road map for where we see obstacles to orderly have resolution under the bank code and to give them an opportunity to address those obstacles. >> i appreciate that you're doing that but the statute it seems to me is pretty clear here. that it's mandatory that these plans be submitted each year and that each year you determine whether or not the plans are credible. >> so as we talked about yesterday, we're listening for hints on the monetary policy but also to how much the fed is in play politically this year. the central bank doesn't seem to have too many friends at the moment on either the right or the left. becky? >> all right. this is going to be something people are going to be watching pretty closely today. most pundits expect he'll be able to walk a fine line and

make her way through it. >> i think she was blind sided by the politics last side especially from warren. the idea that u they weren't ready for the resolutions. and warren made them go back and comment on them and call them unsatisfactory after that dustup in the committee hearing there. so there's just two ways to listen to this. and there's two ways the fed is in play. obviously a lot of talk about monetary policy, but the other is the politics and how much shelby really wants to give yellen a hard time is going to be critical. >> you think they -- she hints at anything about patience or any of those wordings? i think that's what financial markets are really waiting to hear. >> i think that's going to be a big part of it. that's what financial markets do want to hear. they want to hear whether the outlook for monetary policy, i think she'll probably use that word patience again. she'll talk about inflation

being too low but expected to go back to the 2% target of the federal reserve. but whether or not she's really asked a lot about monetary policy is a question. because what we don't know is how much politicians in washington right now see the ability to score political points by essentially bashing the fed. >> let's talk about the unemployment rate. right now within .1 of 1% where the fed was last time it started raising rates. that's going to be tough to write off as a nothing. >> but what they're going to do and what i hear happening when i talk to fed officials is this idea of changing what ethe right level of unemployment is that should trigger a rate hike. we talked to john williams about this quite a bit that the place where unemployment would fall to a point where it starts creating inflation may be quite a bit lower than where the fed is. it may be actually below 5%. >> okay. steve, thank you. >> my pleasure. stifel financial looking to

acquire agee expanding by 35%. this acquisition would another advisers and representatives. here to walk us through the deal is stifel's chairman and ceo ron kruszewski. good morning. >> good morning. >> this is the latest in a string of acquisitions you've understood taken for several months. what's the point? what's the end goal? >> it's actually over the last several years the end goal has been the same it's been for a number of years. and the financial crisis created tremendous opportunity for firms like ours. we're simply taking advantage of it. >> is it important to be big? >> you know not big for big's sake at all. i always say about being more relevant. relevant in the markets and relevant to clients.

and we're becoming more relevant. so it's a great deal. i'm very excited about it. >> you sure you don't already own stern agee ron? >> i might. >> i was sure that -- what was that other one you bought? the one out in florin park. >> kbw. miller buck buyer. thomas wiesel. >> big rollout. >> yeah. it's not a rollup. you can't rollup people. >> it's andrew i know. >> hey, joe they ruined my morning this morning. someone said i had a picture in "the wall street journal," i kind of look like you. so it ruined my day. >> that's funny. if your effing dreams my man. >> what are you hearing from clients right now? how excited are they about the markets? >> i think the people -- the markets, you know have some challenges here. pe is expanding to offset that. but, you know i think a lot of

people are going to be looking at what happens with the fed and what happens with monetary policy. you know, we've had a real tightening with the dollar rising. i think earnings will be hurt by that. and i think this is a critical testimony that's happening today. and what happens in the future i think, is going to have some impact. >> what if janet yellen suggests that higher interest rates could come sooner rather than later. let's say as early as june. how does the market react to that? >> i don't think the market today is expecting that. but i personally believe that the risk of raising interest rates too fast is almost asymmetrical. i think this economy has to improve and inflation has to get back to the 2% target. i'm not as focused on the unemployment as a trigger as i am with the fact that inflation worldwide, not just in the u.s. has to show -- we've got to get inflation. i can't believe i'm actually saying that compared to what we

went through in the 70s. but today inflation would be welcome. and it's nowhere in sight. >> so you'd like to see the fed hold off for as long as possible. >> again, i think the risks of raising too soon offset the -- whatever the view of the risk is of not raising. that's my personal opinion. >> also you look around the globe and look at how strong the dollar is right now and how other central banks are trying to ease at this point. i guess that complicates the equation too. >> when you think about a rising dollar, a strong dollar is effectively a significant tightening here in the u.s. we've already tightened when you think about the fact that a rising dollar the deflationary. and when we're trying to get inflation going. so, you know, look. but i will tell you there's always a lot of angst in the winter and i believe in what was that movie, joe, in the '80s in spring there will be growth? >> yep. "being there." that does kind of look like --

that is the best picture that has ever been taken of you. it does kind of look like me. >> joe, some of -- >> i can't believe you would complain about this picture. >> joe, i am not complaining about the picture. i'm complaining that someone called me and said it looked like you. i think it's a good picture of me. i just don't want the comparison. >> you can't look like me ron. you can try and try. stifel is the one in florin park. beautiful office in florin park right, ron? >> we do. i mean look back to the stern agee deal it's going to help our fixed income business. >> it's a good firm. it's a good acquisition for you. >> it's a great firm with great people. and i couldn't be more excited about that. and, look no matter what anyone says from my perspective here we see growth. you know maybe a little challenge in the next couple months. but over the next few years the

economy and b the markets are going to be a lot better than they are today. >> i think ron looks great in this picture. i don't know who mistaked you for joe. >> ha-ha. >> you look so young in this picture. >> that's true too. you're a man on the move. but you spell your name all wrong. you and coach k have to work on your spelling. krzyzewski. you're kruszewski aren't you? there's k's and r's and none are pronounced. >> i want to buy a vowel. all right. thank you. >> thanks, everyone. >> all right. i think he was kidding. >> he got you. >> does look good though. up next it's more than just microblogging. the ceo of tumblr joins us to talk net neutrality and much more. and don't fesht later this morning, this young gentleman has been on before from tumblr. he's so young. and also we're going to be talking about janet yellen. we'll carry her testimony as it

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the next phase of this long tortured net neutrality event will be likely litigation. i would predict that it's at least two and up to five years before the rules are fully and finally settled. >> okay. that was former fcc chairman michael powell commenting on net

neutrality rules earlier on "squawk box" this morning. tumblr is a new way to consume media. it's not new anymore, but new to some people. and the company is sounding the alarm on the need to quote, save the internet. it's a call to arms for users to contact government officials to influence net neutrality policy prior to the fcc's vote on thursday. david karp is founder and ceo of tumblr and he's here with us now. >> thank you for having me. >> we've had a rousing debate around this table for a long time about what to do about net neutrality. and we've had a number of ceos come on who either traditionally own pipes for the most part who say you know what? these rules, which i think go farther than what they even expected originally the title two stuff. ultimately are going to really slow down the internet. it's going to slow down innovation. do you believe that? >> i really don't. i think the way we see the most innovation is by sort of separating the layers of the stack. so making sure that there's a

competitive market for carriers where they're competing to deliver us the fastest, best internet that question get access to with modern technology. then on top of that you have a free, open market place of services that can count on -- >> their point is if you talk to someone like at&t randall stevenson, he will say right now they have more capital expenditures. they have invested heavily to build their network and if you turn it into a utility, it will not be profitable to continue investing like that and as a result it will slow down. >> it's just not true. it's been disproven. >> how? >> by the tech end of it too there's a lot of artificial throttling going on. they have the band width to deliver this. and if we could move further in breaking down the near-monopoly situation we have right now, we would hopefully see more competition. >> you have monopoly because it's expensive to build the pipes. you don't have people to build

multiple pipes to the door. >> i contest, not my area of expertise. >> in general the industry had a light touch in terms of -- government had a light touch in terms of regulation. would you say that that's been beneficial in the past that there's been a light touch? in general, you think heavy handed government regulation is a good thing or bad thing for an industry? >> i think a bright line rule that spells out the rules we believe in. i think the bill of rights is a good thing. even without getting into the weeds. the first amendment that says this is a truth we believe. >> so let me ask you a question. >> i don't see how that's an answer at all comparing this to the bill of -- i understand the bill of rights but has it been a problem up to this point where you feel that people -- that net neutrality has been violated and people have been harmed? >> there has. we've had instances of comcast, for example, to block whole

protocols and shut off access to innovative parts of the internet. when that happened recently in 2010, the fcc stepped in to try and intervene. we've had laws. we've had weak laws. things like the telco act that these carriers have kind of been following. they broke it down in the courts last year where the courts flatout said look. this bad behavior under the current laws isn't legal unless we're -- >> so if randall stevenson has said point blank, i'm not going to build out certain things i was going to build out. i'm going to finish the stuff for directv but then i'm going to mexico. if he -- how has that been disproven? how can you tell him he's been disproven that he's not going to do that? that's just the word you used. it's just been disproven they won't build it out. >> the at&t ceo has come here and said i'm not going to use

the money i was before. >> there's a huge number of consumers already paying out the nose for access to the internet. >> how has it been disproven that he's not going to actually pull in on his buildout of more infrastructure? >> consumers are demanding faster internet. >> so he's actually going to spend money building it out. he's just lying. >> they are. they have been. >> let me ask you. because he's putting pressure on on politicians to make a case for own the complete stack. >> so he's going to do it anyway. if he can't recoup he's going to do it anyway? >> absolutely. >> doesn't mean someone will pay for it if they're losing money as a result. >> somebody else is going to come along and figure out how to deliver. >> i thought it was a monopoly? >> i confess, i don't entirely understand the circumstances of that monopoly at least in a city like new york. >> i'm an advocate of net

neutrality. however, i've become a little more nervous once i realized that we were talking about going back to a title two world. because that to me meant that there was going to be sort of an extra level of regulation that i hadn't really pondered. and by the way, i don't think many people in the industry had. we've had people like barry diller who have come on this show and been strong advocates for net neutrality yet when it comes to title two, they get a little bit more nervous. >> a little bit more nervous? he's totally against it. he wants it tied in the courts. >> does the title two thing change the dynamic for you? when you talk about net neutrality, is title two and net neutrality one in the same to you? or do you separate them? >> i do. >> is that an issue? >> i get the kind of just wanting to stay wanting to preserve what we have right now. we've started to move in a bad direction. so this was -- the internet

founded and established and has generally grown to a good place in the last few years. the carriers have tried to kind of take it off the rails. they tried to do the prioritization. they tried to do the blocking. >> i don't even know that's true. where have they been throttling? where has that been happening? >> comcast blocking traffic completely in 2010. >> if you look at netflix traffic, sometimes it is 80% of a network's nighttime low. >> the consumer is paying for it. >> i'm not a netflix user. it ticks me off i have to subsidize everybody that is doing that. why do i have to pay for that? >> here's what's going to happen. netflix can thrive. can thrive but with deals that we established with carriers. what that means carriers are going to bless a handful of partners that either they founded or are cutting them in on the economics of it and the opportunity for the next emerging innovative platform the next tumblr the next

netflix that has a promise for consumers isn't going to get that blessing. >> comcast said it wasn't going to do that. it went before congress and said they won't do those things. >> they've started to do those things. >> where? >> they've blocked protocols. >> there are examples. just to -- just -- if you go back in 2010 a number of examples, both comcast, at&t but a number of the telecom providers have throttled traffic. that's not in dispute. >> they haven't, not a tremendous -- >> there have been people who have made that allegation level 3 has made that allegations and others. last question on -- it's yahoo! question -- now that you're part of yahoo! for what 2 1/2 years? >> uh-huh. about two years in. >> one of the things that marissa mayer said she was going to keep her hands off the company. kara swisher wrote an article late january suggesting that the advertising side might get

merged. >> it is getting merged. >> it is getting merged. does that worry? >> it does. this is an exciting moment for the company. we've been hard at work building the business last two years, advertising business scaled our sales teal to nearly 100 people. all running out of our organization, our office in new york. it's gotten to a point where we've established those ad products in the marketplace and we're ready to take those out there with yahoo! and sell those products, those networks together an opportunity to hopefully do more bigger business and offer more bigger platforms to those marketers and brands. i'm excited about that this year. >> thank you for coming. >> thank you for having me. i'll be more informed next time. >> appreciate it. >> brian roberts on line one. you'll be back. >> when we come back jim cramer's going to break down earnings of the morning. stick around.

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stock exchange. jim cramer joins us now. i think -- can i sum it up? tesla, you any, might be getting a little bit like story stock but apple at 775 is still in terms of most metric not frothy, right? >> again, stuck with this price-to-earnings multiple way to value stocks done that versus what happened in 2000 you get a 15 multiple for apple and it's hard to justify that given the capital redeployment where they're able to return a lot from shareholders from buybacks and dividends and they have two huge new product, the wristwatch and apple pay, jpmorgan highlighting that this morning i'm see a lot to like versus tesla where it's awful cold outside. see how those batteries do. i've been attaching tesla motors website for people who own the cars and there's grousing. at the same time i recognize that it's a cold situation and people who come out against

tesla are really coming out against thomas al va edison and tesla. you have to be careful if you come out against this thing. >> see you later. diane diane swank. i want those two to get together. >> why not? it's like. >> diane swank -- >> a fellow negative on retail. i'm looking at home depail cracker barrel nordstrom, dillard, other than walmart i don't have a lot i'm worried about. walmart would have gone higher if it weren't for the fact they're paying more people. retail and restaurants unbelievable. against them, it's painful. love to hear a retailer i'd love to put a short on because i know it ain't home depot. >> "squawk box" will be right back. it can bring out the worst in people. but the m-class scans for danger... ...corrects for lane drifting...

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that does it for us today. join us tomorrow. right now it's time for "squawk on the street." ♪ two, one♪ ♪ good tuesday morning. welcome to "squawk on the

street." i'm carl quintanilla with jim cramer david faber at the new york stock exchange. the latest s&p/case-shiller home price index is out. the up in's going to be on the screen in a moment. a big day setting up ahead of janet yellen's testimony and big earnings from home depot, comcast, macy's. futures are timid. oil's got a bounce still below $50, though. the ten-year remains right in the tight range around 2.7. road map begins